May 24, 2012 / 9:02 AM / 7 years ago

UPDATE 2-D.Telekom warns regulation stifling investment

* CEO says regulators taking away incentives

* Sees complete sale of T-Mobile USA unlikely (Recasts lead, adds CEO comments, background)

By Harro Ten Wolde and Leila Abboud

COLOGNE, Germany/PARIS, May 24 (Reuters) - Deutsche Telekom on Thursday joined a growing chorus of complaints about telecom industry regulation which executives say is stifling urgent investment in operators’ fixed and mobile networks.

Chief Executive Rene Obermann told shareholders at an annual shareholder meeting on Thursday regulation in Europe and Germany cost the company “vast amounts of revenue”.

“Everyone is calling for high-speed networks in the furthest-flung corners of the country - ideally fibre-optic networks ... At the same time, however politicians at the European level and the national regulatory authorities are taking away the incentives for investment,” Obermann said.

Telecom operators including Vodafone, Telecom Italia and France Telecom have been pushing back against a range of European regulations intended to spur competition and network investment.

The war of words has escalated over mobile termination fees, roaming charges as well as a looming battle over how European regulators are pressuring operators to invest billions in high-speed broadband networks.

The conflict comes as policy makers worry that Europe’s communications infrastructure is falling behind that of the United States and much of Asia.

The United States and Japan already provide fourth generation mobile access which offers much faster Internet speeds but which remains rare in Europe.

Britain has not yet even sold off 4G licences yet and French operators will only begin offering 4G mobile in some cities next year.

The Deutsche Telekom chief, detecting a clear link between that trend and heavy regulation, urged Brussels to halt price declines for network usage resulting from regulatory intervention.

“If not, there will be no new stimuli for broadband roll-out,” Obermann said, adding that regulators were giving cable network operators preferential treatment.

“The industry would be prepared to shoulder the main burden of broadband roll-out. What we need is a turnaround in regulatory policy.”

A spokesman for European telecommunications commissioner Nee lie Krebs said the EU also wants to reduce investment costs.

“We think we can push them down by another 30 percent if we made planning and civil engineering more efficient. And we would love to hear concrete ideas from the industry on how to drive up those cost and time savings,” the spokesman said.

On broadband the European Union has set ambitious targets to bring basic high speed Internet to all Europeans by 2013 and by 2020 half of all households should have access to fast broadband above 100 megabits per second.

But those goals could remain out of reach because many telecom companies across the region have not begun building fibre networks, despite pledges to spend billions of euros on rollouts.

Deutsche Telekom also hit a regulatory wall in the United States when it tried to sell its T-Mobile USA unit to At& t <T. n>. It had to abandon the deal after heavy resistance from competition regulators.

Obermann said he believed a complete sale of the troubled unit was unlikely. “We must find other ways to increase the (unit’s) return on our capital, or reduce our capital investment,” he said. ($1 = 0.7947 euros) (Editing by David Cowell)

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